Distortions between the bonds and the S&Ps became even more blatant with Monday’s trading action. The early morning saw a minuscule correction turn around. 12 instances of plus 1000 tick or greater buy programs took place on the New York Stock Exchange. The bonds are also inflated. They held their early gains while the stocks turned from the red to the black. They moved through the 143 1/2 resistance and held impressively. The last 2 days of the month can be tricky. Then throw in the leap year phenom and the computers may be fooled. Monies are flowing into the market, but each day there is a pullback. The count on my CCT is placing S&P numbers at 1375 area. Patience has kept us from issuing a short even though the CCT is overbought. I’ve been constantly searching for signs indicating the upside is losing momentum.
The trading on Leap day had a pattern change; making a higher high and then following Bernanke’s speech the market took a nosedive. Stock price action did not erode as much as the internal NYSE tick action. A critical crack in the armor of the bond bulls was experienced. It broke more than 1.5 points from the highs. Therefore a potential cross through the box setup could be forming. The bonds definitely had a shell-shock revelation.
Apple’s stock is over $545 surpassing it’s 52-week high. It is the world’s most valuable business with over a $500 billion market value making it the 6th company above the mark! Every company dropped back down within a year of reaching the milestone. But Apple anticipates another boost with the release of the iPad 3 on the 7th.
The irony or very orchestrated planning is that whenever Bernanke has a testimony; immediately upon completion the stock market rallies. I’ve made an entry in my diary concerning this and constantly keep it mind. There was an influx of cash that provided buying for the first day of the month. However, it did have a pullback on economic news and perception that was contained. Thankfully the short-term profit objective was reached on the 1st advisory trade of the month.
The bonds were the whipping boy in the early trading as the June contract hopped to just above 140. The action had the look of stabilizing once the 140 area was approached. Now I am looking to see if any type of sustained rally can be manufactured. The June contract support area is 139 1/2. A close below that would be a pattern rollover. It is noteworthy that each time a major support has been approached it has provided a trampoline effect.
The Dow did cross over the 13,000 mark and closed above it, but couldn’t remain the height. Oil barely nudged above $110 per barrel after news spread about a pipeline exploding in Saudi Arabia. It calmed down and eventually slipped back to $108 a barrel. The U.S. Dollar rose to it’s 9 month high against the Japanese Yen.
Share volume was light all week, especially the last couple trading days. Movements were very drab and docile. Apparently, many traders and institutions were on the sidelines and the advisory trade was not executed. Although the bonds did have vitality with a reflex rally pushing prices up over one full point at the highs.
I am an old fashion tape reader. It is difficult to explain tape reading to a novice, but the old timers (which I am) would look at Friday’s stock market trading as a very heavy tape. The price action was unable to lift or sustain any rallies. Virtually the entire intraday session was spent deep in the read. This stock market needs a rest!